The number of publicly traded companies peaked in 1997 at 9,113 but now stands at 5,734.

The dramatic decline in newly listed public companies in 2015 and 2016 has garnered attention recently in the financial press.

Reports show that the number of initial public offerings dropped from 170 in 2015 to only 105 last year. This was the lowest level since 2009, when only 63 companies went public in the aftermath of the financial crisis.

But it's not just IPOs on the wane. The number of all U.S. listed public companies has declined in recent years as departures from the stock exchanges outnumber new entrants.

Market experts typically attribute the decline to such factors as the ever rising regulatory costs of being public and the extreme stock market volatility in recent years. Also, startups increasingly prefer private funding and venture capital firms over public capital markets.

These are all good reasons to avoid being public, but something more profoundly disturbing is in play. The shrinking number of public companies is not a recent phenomenon. The decline started two decades ago.

Consider this: The number of publicly traded companies peaked in 1997 at 9,113 but now stands at 5,734, according to The Wall Street Journal. This drop of almost 40 percent puts the total of public companies at about the level it was in 1982.

Something is happening here. Author Gerald Davis makes a compelling argument in his book The Vanishing American Corporation that the corporate form is becoming a relic of a bygone era. In the 19th and 20th centuries, corporations were the preferred means of raising massive amounts of capital to build the nation's railroads and manufacturing plants.

Those endeavors required a lot of money for land and equipment and to hire thousands of workers.

"The corporation was a good way to finance enterprises characterized by economies of scale, where bigger was cheaper," writes Davis, management professor at the University of Michigan's Ross School of Business. "If the cheapest way to make cars is on a giant assembly line in Detroit ... and ship them to the rest of the country, then it makes sense to form a corporation and issue shares."

But that mindset led to what he calls the "increasing obsolescence" of corporations. For a growing number of entrepreneurs, the traditional corporate form is no longer the preferred way to organize, market and deliver their wares.

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It is being replaced by the virtual corporation, in which a network of independent contractors, suppliers and customers communicate and collaborate with one another through information technology — namely the internet and smartphones.

"Companies have found it easier and cheaper to outsource whole segments of the supply chain, including manufacturing and distribution," he said.

The Nike example

The best example of this is Nike Inc., the world's largest sneaker and athletic apparel company. It has annual sales of more than $30 billion, yet hardly any of its 70,000 employees are involved in making sneakers. Nike simply focuses on what it does best — design and marketing — and contracts production to East Asia.

Nike was among the first large corporations to undergo vertical "disintegration," but the practice has now become commonplace in many companies, including Apple Inc. and Sara Lee, now Hillshire Brands. The advent of generic manufacturing and distributor companies along with cheap cloud computing has lowered barriers to entry.

"Anyone with a credit card and a web connection can create an enterprise from incorporation to production to distribution," Davis writes. "The economies of scale that gave birth to the modern corporation have disappeared in many sectors."

Companies can scale up or down quickly without spending a lot of money on plant, equipment, computers or people. They simply rent or contract for them. Because of this, employment in many industries, such as computer manufacturing and electronics, has been obliterated.

Uberization

He cites Vizio Inc. as another example. Its 200 employees sold almost as many televisions as the much larger Sony Corp. did in 2007 with 150,000 employees. Davis concedes that it's impossible to know where all this is taking us — perhaps to economic nirvana or to a nation populated by geeky computer code writers.

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Workers today fear automation and globalization. Now they face "uberization," a reference to the popular online taxi service, Uber. In other words, jobs and careers are become tasks and gigs paid for on a piece rate.

"There is an Uber for groceries, packages, flower delivery, valet parking, laundry ... and physician house calls," he writes. "For any vaguely plausible service that one person is willing to do for another for money, someone is launching an Uber for that."

One thing is clear. We are in the midst of what Davis called a third industrial revolution, and each had its characteristic technology — steam engine, assembly line and now the smartphone.

It is not clear how the corporate structure will evolve during this revolution. But if the current state of the IPO market is any indication, it's certainly not working for the coming generation of entrepreneurs. They seem to prefer their privacy.